Note 15. Segment Results

The Company evaluates the performance of its reportable segments based on, among other measures, operating income, which is defined as income before interest expense, other income, net, and income taxes. Reportable segment operating income and segment operating margin (defined as segment operating income divided by segment revenues) are indicative of short-term operating performance and ongoing profitability. Management closely monitors the operating income and operating margin of each reportable segment to evaluate past performance and actions required to improve profitability.

In the Industrial Products Group, the Company designs, manufactures, markets and services the following products and related aftermarket parts for industrial and commercial applications: rotary screw, reciprocating, and sliding vane air and gas compressors; positive displacement, centrifugal and side channel blowers; and vacuum pumps primarily serving manufacturing, transportation and general industry and selected OEM and engineered system applications. The Company also markets and services complementary ancillary products. Stationary air compressors are used in manufacturing, process applications and materials handling, and to power air tools and equipment. Blowers are used primarily in pneumatic conveying, wastewater aeration, numerous applications in industrial manufacturing and engineered vacuum systems. The markets served by the Industrial Products Group are primarily located in Europe, the U.S. and Asia.

In the Engineered Products Group, the Company designs, manufactures, markets and services a diverse group of pumps, compressors, liquid ring vacuum pumps, water jetting and loading arm systems and related aftermarket parts. These products are used in well drilling, well servicing and production of oil and natural gas; industrial, commercial and transportation applications; and in industrial cleaning and maintenance. Liquid ring pumps are used in many different applications such as water removal, distilling, reacting, flare gas recovery, efficiency improvement, lifting and handling, and filtering, principally in the pulp and paper, industrial manufacturing, petrochemical and power industries. This segment also designs, manufactures, markets and services other engineered products and components and equipment for the chemical, petroleum and food industries. The markets served by the Engineered Products Group are primarily located in the U.S., Europe, Canada and Asia.

The following table provides financial information by reportable segment for the three and nine-month periods ended September 30, 2012 and 2011:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Industrial Products Group
Revenues	$	311,767		$	320,171		$	967,316		$	934,227
Operating income ⁽¹⁾		39,402			38,607			95,765			103,734
Operating income as a percentage of revenues		12.6	%		12.1	%		9.9	%		11.1	%

Engineered Products Group
Revenues	$	236,717		$	294,511		$	798,538		$	823,001
Operating income ⁽¹⁾		49,650			67,973			181,114			188,841
Operating income as a percentage of revenues		21.0	%		23.1	%		22.7	%		22.9	%

Reconciliation of Segment Results to Consolidated Results
Total segment operating income	$	89,052		$	106,580		$	276,879		$	292,575
Interest expense		3,739			2,898			11,540			12,179
Other expense (income), net		(1,252	)		(138	)		(2,832	)		(821	)

Consolidated income before income taxes	$	86,565		$	103,820		$	268,171		$	281,217

(1)	See Note 3 “Restructuring.”